Posts Tagged ‘Statism’

Explaining California “lifers,” or why people stay in a failed state.

November 13, 2012 3 comments

I have been a resident of several states across the United States, but two in particular stand out. One is California, to which I moved when I was ten, left at fifteen, and returned to for college. The other is Minnesota, where I was born, but to which I did not return until after college.

Just recently, my total time spent as a Minnesota resident surpassed my time as a Californian, capturing a plurality of my life’s years. Many have found it remarkable that I left a tropical paradise like California for the frigid tundra of Minnesota, but if you can look past the weather, California simply isn’t a great place to live. As I have been saying for years, “it’s a nice place to visit, but I don’t want to die there.”

Many of my friends disagree with me. One has spent nearly 70 years (aside from higher education back east) in the same beach community. Another calls himself a California “lifer,” which I find eerily similar to how prisoners with life sentences describe themselves.

In any case, while California has many things acting in its favor, it is nevertheless a failed state that I simply cannot find attractive as a home. To be fair, Minnesota is also heading in the wrong direction, but if California is just about to break the tape, Minnesota is still putting its running shoes on.

Victor Davis Hanson at the City Journal recently attempted to explain why he is a California “lifer,” in an article entitled “California, Here We Stay.” Many reasons he cites make perfect sense. Family heritage is one, and it is perfectly understandable. Indeed, it is the best reason I can think of for why I live in Minnesota and not Texas. There is the weather, of course. And there are certain cultural and educational institutions that are very attractive.

On the other hand, hegemony and inertia cannot prevail forever – just ask Britain, Rome, Greece, even Akkad. The general rule is that it is better to be present for the incline phase than the decline phase, and I can’t help but think that even the best of California has hit its peak. If UC Berkeley were a stock, it’d be

Hanson is honest about California’s shortcomings. Finances built on rainbows-and-unicorns accounting methods; poor primary and secondary education; hostile business climate running the productive out of state; environmental extremism – all of these things are conspiring to choke off the best of what the state has to offer the world.

On the other hand, he makes a point that I simply cannot get behind:

Another reason to feel hopeful about California is that it’s reaching the theoretical limits of statism. To pay for current pensioners, the state simply can’t continue to bestow comparable defined-benefit pension packages on new workers, no matter how stridently the public-sector unions claim otherwise. And as public insolvencies mount—with Stockton, Mammoth Lakes, and San Bernardino seeking bankruptcy protection a year after Vallejo emerged from it—public blame is finally shifting from supposedly heartless state taxpayers to the unions. The liberal unionism of an aging generation is proving untenable, as we saw in recent ballot referenda in which voters in San Diego and San Jose demanded that public-worker compensation plans be renegotiated.

California is reaching the theoretical limits of statism? This strikes me as remarkably naive, and it sounds hauntingly similar to things like “it couldn’t happen here,” or “it can’t get any worse.” Or perhaps “there are no black swans.”

I for one prefer not to underestimate the statist impulses of a polity that has consistently pushed the once-bright beacon of hope that was California back into the dark ages of economic and social thought. And they did it in less than a century and a half to boot.

In my personal opinion, the decay in California is not over, and it is not close to being over. I know that making predictions is the easiest way to be proven wrong, but here goes nothing.

I think that California will continue to be held in a chokehold by statists until the situation becomes completely untenable on a state level. At that point, the citizens of California will become enraged – not at their elected Judas goats, but at the federal government for not bailing them out. Seeing the practical importance of California’s electoral votes to their parties, the statist kindred spirits in Washington will forge a bipartisan grand bargain to bail out California, complete with all the crony capitalism and blatant corruption that entails. California will then double down on its failed policies and things will get worse. Another bailout will happen in quick succession, and while token gestures may be made to restore fiscal sanity, the damage will have been done.

California’s future is not bright. Perhaps California “lifers” have a reason to stay if they are already wealthy or comfortable enough to avoid the worst of the coming catastrophe. But if you’re a common person, your odds are poor.  I fully expect to see the middle class, whose livelihoods are far more likely to hinge on the day-to-day health of the economy than the wealthy, to continue to flee.

My only hope is that they don’t bring the politics of old California with them when they go.


More on China being the “new Japan”

March 10, 2012 2 comments

China being the “new Japan” is a claim I have made multiple times before. The pattern is/will be the same:

  • First, China will emerge and American will feel threatened;
  • China will then seem ubiquitous if only because people are looking for it more often;
  • China will purchase things that seem quintessentially “American,” and the jingoist rhetoric will heat up;
  • Economic manipulation will cause China’s economy to look comparatively better than ours, increasing calls for statist intervention;
  • China will blow up;
  • Nobody will care anymore.

We are almost to the end of this cycle. China’s books are so bloated with fake money and unsustainable corruption, the blowup is inevitable (though no one knows when). However, that has not stemmed the tide of calls for statist intervention along the lines of the “China model.”

And so I present an article (admittedly old, which I had bookmarked and forgotten about), by Ross Kaminsky about how the Chinese model is the wrong model for the United States, notwithstanding certain calls for imitation. Here is an excerpt, but as always, you should go ahead and read the whole thing.

The professional left in America and their chattering-class useful idiots have followed a consistent pattern for a century: sympathizing with tyranny in their musings over how to implement policies fueled by jealousy and an undying fear of economic liberty.

There has hardly been a better example in recent years than Andy Stern’s Wall Street Journal December 1st op-ed entitled “China’s Superior Economic Model.” In his article, Stern approvingly quotes Intel Corporation co-founder and former CEO Andy Grove who stated in a 2010 Business Week article that there is “emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better.”

…As someone who was studying economics in college in the mid-1980s, I endured countless comments about how American corporations’ narrow focus on “next quarter’s earnings” (as if that were true) was congenitally inferior to the longer-term view supposedly taken by Japanese companies.

Over the next several years, the Japanese bought Rockefeller Center (from my alma mater, Columbia University), CBS Records (purchased, renamed, and still owned by Sony), and the famed Pebble Beach golf course.

Harvard professor Ezra Vogel published (actually in 1979) a book called Japan As Number One: Lessons for America, in which he argues, as a reviewer for the Economistmagazine put it, “that the United States should give itself a political and cultural heart transplant.

…In 1995, the Mitsubishi Group, which had purchased Rockefeller Center, forced the project into Chapter 11 bankruptcy, losing nearly two billion dollars for their efforts. And a few years later, as GolfDigest‘s Mark Seal put it, when Peter Ueberroth put together a group to buy Pebble Beach for less than the Japanese had paid for it, the deal “bankrupted a Japanese boom-time golden boy, and, most recently, sent an army of Japanese bankers back home with little to show for their seven years of superlative stewardship but their good names.”

Since then, Japan has turned in not just one but two “lost decades” with its persistent near-zero interest rates frequently being described as “pushing on a string.” According to a recent Heritage Foundation study, “In 2010, the Japanese economy looks to have been smaller than it was in 1992, an incredibly poor result. It is not just a matter of a decline in output; it is also a remarkable decline in total wealth.

…So when you hear people — especially non-economists with political agendas — long for the statism that characterizes most of America’s economic competitors, listen with great skepticism.

That, in a nutshell, is exactly the kind of progression I am talking about. If you are interested in bubbles as a phenomenon, or at least a further explication of the Japanese bubble (and many others), I would recommend “Devil Take the Hindmost,” by Edward Chancellor.

And then I would recommend some reflection on the current state of Chinese “state capitalism,” as if such a thing could possibly exist in the long term.

“The Real Trouble with the Birth Control Mandate”

March 2, 2012 Leave a comment

I consider myself a smart person, and at times articulate.  But every so often, someone comes along with a statement on a particular issue that so easily eclipses anything I could possibly say, the only thing to do is link to it. Reading Ludwig von Mises seems to induce such situations quite regularly.

Today, however, John H. Cochrane at the Cato Institute is that person.  In a post entitled “The Real Trouble with the Birth Control Mandate,” he lays out with impeccable logic just what exactly is happening with the Obama administration’s latest assault on religious liberty.

I will excerpt here, but you absolutely need to read the whole thing:

Why did HHS add this birth-control insurance mandate—along with “well-woman visits, breast-feeding support and domestic-violence screening,” and “all without charging a co-payment, co-insurance or a deductible”—to its implementation of a provision of the new health-care reform law? “Because it promotes maternal and child health by allowing women to space their pregnancies,” says the HHS advisory panel. Because these “historic new guidelines” will make sure “women have access to a full range of recommended preventive services,” says the original HHS announcement. To “increase access to important preventive services,” echoes White House Press Secretary Jay Carney.

Notice the doublespeak confusion of “access” and “cost.” I have “access” to toothpaste because I have two bucks in my pocket and a competitive supplier. Anyone who can afford a cell phone can afford pills or condoms.

Poor women who can’t afford birth control are a red herring in this debate. HHS isn’t limiting this mandate to the poor anyway. We all have to pay. The very poor typically don’t have employer-provided health insurance in the first place. “Allowing women to space their pregnancies”? Was there some sort of federal ban on birth control before this?

Emphasis is mine, and it is absolutely true that poor women are being used as political pawns here. It really sickens me when inevitably this is the way the debate is framed. There is nothing wrong with allowing “access” to birth control to anyone, poor or otherwise. There absolutely is something wrong with forcing others to pay for it, and most especially when those people find birth control morally reprehensible.

Here’s a good mandate: Let’s mandate that every time a government official says that the government is going to “help” some category of voter, he or she has to say who they are going to hurt in the same sentence. Because it has to be someone.

But what about the fact, you may ask, that unwanted children are a burden on society as well as to their mothers? Perhaps there is a social interest in subsidizing birth control? Perhaps there is—but if so, this is an awful way to do it.

The minute pills are “free,” under insurance, the incentive for drug companies to come up with cheaper versions vanishes. So does their incentive to develop safer, more convenient, male-centered or nonprescription birth control. And by making pills free but not condoms, the government may inadvertently be contributing to an increase in sexually transmitted diseases.

This a specifically situational restatement of Frederic Bastiat’s point in his famous essay “What is Seen and What is Not Seen.” Bastiat, by the way, is another person whose writings cause me to wonder if I could ever say it better.

Ultimately, the assertion that women are being directly attacked if this law is not passed is atrociously vapid. But even assuming, ad arguendum (and very generously), that it is correct, it still provides no justification for the direct attack on others through appropriation of their wealth and work. One wonders if Obama’s mother ever told him that “two wrongs don’t make a right.”

As for the churches, Cochrane is very much correct when he makes this a simple issue. One should not belabor the point here:

There is also the issue of religious freedom. Our nation is divided on social issues. The natural compromise is simple: Birth control, abortion and other contentious practices are permitted. But those who object don’t have to pay for them. The federal takeover of medicine prevents us from reaching these natural compromises and needlessly divides our society.

Or, as this A. Barton Hinkle piece at Reason so eloquently puts it,

This is like ordering Jewish schools to buy pork for their cafeterias and then claiming to respect Judaism because synagogues are exempt.

This kind of savagery toward religious liberty is all in a day’s work for Obama. But lest those who are secular think that this does not apply to them, recall that you are not exempted either. The justification is different; the injustice the same.

Realism about Capitalism from Donald Boudreaux

January 1, 2012 Leave a comment

Over at Cafe Hayek, the inimitable Donald Boudreaux has a piece called “An Undeniable Asymmetry” that is well worth the time it takes to read.  Briefly, it touches on the non-linear nature of the political world, in that moving closer to statism may not create the horrors of North Korea, and moving closer to freedom may not create a harmonious and peaceful society.

This idea, that we do not and cannot know exactly what consequences lie ahead of incremental changes in policy, is a pet project of mine.  Anyone who attempts to sell the idea that they know what the future holds, even with regard to a single piece of legislation or policy, is either lying to you or stupid, or possibly both.

And therefore, it necessarily annoys me when advocates of the free market make promises that are impossible to keep.  Letting people do what they desire to do in a peaceful and non-coercive way will, I assert, absolutely make things better.  Will they make them perfect? Absolutely not.  And those who innocently advocate freedom as a solution to all of our societal ills are setting themselves (and me) up to fail.

And when statists see that freedom and free markets do not stop criminals completely in their tracks, do not resolve all negative externalities, do not stop certain people from losing their jobs or dying of disease, the statists point to these failures as failures of freedom, not as failures of our baser human natures.

This is why I particularly appreciate the realistic tone taken by Boudreaux in this piece:

But we must never lose sight of this important asymmetry: complete or near-complete state control of the economy has proven to be a sure recipe for deep impoverishment and brutal tyranny, while historical periods that have been close to laissez faire – that is, much closer to laissez faire than is America at the dawn of 2012 – have produced nothing remotely of the sort.  Indeed, whatever problems might be caused by more and more reliance upon laissez faire capitalism are always accompanied by – and are at least partially (and arguably more than completely) off-set by – unambiguous benefits of capitalism such as the elimination of starvation, more abundant supplies of clothing, and better housing.

Any problems promoted by greater and greater reliance upon capitalism, in short, are first-world problems (which isn’t to say that these problems should be tolerated); they are problems incomparably more tolerable than are the horrors promoted by the elimination of capitalism.

If you read the whole piece you will see that it frankly and honestly addresses the problems correlated with freedom and free markets, but it weighs them against the problems of statism.  It does not attempt to sell us a free lunch or naively take up a utopian cause.

Because those liberty-loving folk who expect freedom from government to wash all of our sins and indiscretions away are merely providing ammunition to other side when things turn less than perfect, as they always do.  Realistically, libertarians can offer the world more safety, more prosperity, more comfort.  No one can provide the whole thing.

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